PHILADELPHIA — The Arizona CEO of a private equity firm was sentenced Wednesday to two and a half years in prison for defrauding a South Jersey investor out of $1.35 million with promises of creating a marijuana extract company.
Karl James [bizjournals.com], 50, of Phoenix previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez [bizjournals.com] in Camden, New Jersey, to an information that charged him with one count of wire fraud. He was originally charged via criminal information, which usually means the defendant is cooperating to some degree with prosecutors, in September 2019.
According to federal prosecutors in New Jersey, James was the CEO of Gore Capital, which he told others was a private equity investment firm. In February 2016, the criminal information [justice.gov] said James and an unnamed Ocean County investor both agreed to invest $1.5 million into a company that specialized in extracting and converting cannabinoids from marijuana. They also agreed to form an LLC as a conduit for their joint investment. In April 2016, court documents said James incorporated the LLC in Delaware.
Four days later, court documents said, James instructed the victim to wire his investment funds into a bank account. Prosecutors said James falsely told the victim that the victim also had access to the account. On April 22, the victim wired $500,000 into the account. On July 12, prosecutors said James instructed the victim to wire the remaining $1 million of his investment, which the victim did.
Read more of this story from the Phoenix Business Journal.